A MEDIA PORTENT?

By Chris Daly

There's a story by the AP today that may point toward one path to a new future for news. It reports that the Capital Times of Madison, Wisc., is abandoning its print version and going mainly on-line instead. An excerpt:


MADISON, Wis. - The Capital Times, the feisty afternoon newspaper that helped define this city and championed a unique brand of Midwestern progressivism, publishes its final daily today after a colorful 90-year history.
The paper that battled Joseph McCarthy, former senator of Wisconsin, and crusaded for decades to build a Frank Lloyd Wright convention center could no longer survive after decades of circulation losses.
But the self-described champion of the little guy isn't ready to quit. Next week, the paper starts publishing two weekly tabloids and transitions its daily coverage to the Internet with a smaller staff in a first-of-its-kind move being watched closely in the industry.


Despite the gloomy, elegiac tone of the piece [who says the AP is always neutral about the news?] and its heavy reliance on quotes from readers in their 80s and 90s, the real news is that this newspaper is finding a way to survive by going entirely on-line.

As I have argued before, newspapers are at a crossroads. Part of their legacy from the 19th Century is manufacturing. Almost every newspaper is committed to manufacturing (and distributing!) a product every day. This is a giant anchor they are dragging into the 21st Century.
Newspapers are also, of course, in the information industry. In that field, almost all the work and profits are digital.

Newspapers are like the emblematic case of the folks who used to make buggy-whips for people to use in driving horses for carriages. Those buggy-whip makers never realized that they were in the transportation business. Instead, they thought they were in the horse business, and they went the way of the farrier.

Readers as Owners?

By Chris Daly

A few months ago, I posted a comment here suggesting that the solution to the problem of ownership of America's flagship newspapers like the NYTimes and the Wall Street Journal might lie in their reader bases.

The idea prompted several comments, and it has shown up elsewhere. Now comes a thoughtful essay by Jon Garfunkel on the untapped power of the audience.

Is there a new business model out there?

Wall Street Journal sale: "Creative Destruction" at work?

WSJ & “creative destruction”

In reaction to the sale of the Wall Street Journal (and its owner, Dow Jones Co.) to Australian media mogul Rupert Murdoch, a lot of commentary has focused boldly on the future. Analysts and commentators are full of firm predictions, many of them portending doom. I find the future pretty inscrutable, so I try to focus instead on the past.

In the history of the American economy, the Wall Street Journal has long occupied a special place. Indeed, it is hard to imagine the course of U.S. capitalism without the Journal or something very much like it. Here are some reasons for the Journal’s prominence in our economy:

--The newspaper’s publisher, the Dow Jones company, is a pretty significant for-profit enterprise in its own right, with nearly $2 billion in revenues.
--The editorial page of the Wall Street Journal serves as a consistent cheerleader for capitalism, supplying arguments in favor of the things that business owners want to do.
--Far more importantly, the Journal plays a key role in bringing rationality to the entire system by providing reliable information about markets, prices, and the like. This improves the flow of capital and makes the whole economy more efficient.
(Imagine if you had to get up every morning and make 500 phone calls yourself to find out how the S&P 500 did the day before?)

It is also worth keeping in mind one of the essential features of the capitalist system, which is its relentless, unsentimental process of destroying old businesses and creating new ones. This process was first widely articulated by the Harvard professor (and admirer of capitalism) Joseph Schumpeter in 1942. He called this phenomenon “creative destruction,” arguing that it is an essential feature of capitalism.

The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in. . . .
(from “Capitalism, Socialism and Democracy,” 1942)


It’s a more comprehensive way of looking at entrepreneurship. For there to be winners, there often (not always, of course) are losers.

For a clear example, look at the original companies that made up the Dow Jones average when it was launched in 1896. Most of those once-giant enterprises are now out of business, absorbed into others, or irrelevant. Reflecting the economy of the era, they were big companies involved in industries like lead, leather, rubber, coal, sugar and tobacco. Of the original dozen industrial stocks in the Dow Jones average, only one remains in the current DJIA – General Electric, founded by Edison, but morphed almost beyond recognition into a global conglomerate.

In the media world, it’s easy to see the process of “creative destruction” at work. Let’s go back 50 or 60 years. In that period, if you asked any literate, aware, discerning American about the most important institutions in American journalism, a few names would certainly have cropped up on most lists. Here are three:

--CBS Radio News (home of Murrow, et al)
--Life magazine (home of Eisenstadt, Capa et al.)
--The New York Herald Tribune (the smartest, best written paper in the country).

Since then, all three have been creatively destroyed. Will the Journal survive? Hard to say. But the record suggests that there’s always someone else to create something new out of what is being destroyed.

--30--

More to read

I have been thinking a lot about the Murdoch offer to buy Dow Jones. I would hope that my book, with a consistent emphasis on the business side of the news business, will help people think about these issues. Based on all my research, I think the form of ownership has lots of consequences.

In the case of Murdoch, leaving aside his political impact for a moment, think about the enormous, inherent conflicts of interest built into his potential ownership of Dow Jones. A case in point: through one of his News Corp's subsidiaries (Star TV), Murdoch is the major supplier of satellite television signals to mainland China. In a censorious dictatorship like China, it may have been inevitable, but Murdoch has been turned into part of the regime's program of controlling information.

Now, suppose Murdoch owns the company that publishes the Wall Street Journal. Some of the Journal's best reporting in recent years has been done in China, where a number of correspondents have contributed to hard-hitting series of articles exploring the costs of China's environmental degradation, or the human suffering caused by the government's persistent human rights abuses.

What can we expect Murdoch to do when the Chinese leaders come to him and say they want him to tell "his" reporters to back off?
Does he say, "To hell with you (and your giant market, too)"?